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pearl and myrtle are twins who have the same amount of income and consume the same...

pearl and myrtle are twins who have the same amount of income and consume the same number of spam cans per week. if pearl views spam as an inferior good and myrtle views spam as a normal good, which sister will have a larger price response to spam going on sale?

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Answer #1

If pearl views spam as inferior good, then as the price of this good will rise, then demand will remain constant. On the other hand, if the income of Pearl increases, then the demand for this good will fall. Negative income elasticity is associated with inferior good.

If myrtle views spam cans as a normal good, then as the price of cans increases, then demand for it will fall. On the other hand, if income of myrtle increases, then the demand for this good will rise. Positive income elasticity is associated with normal good.

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